Bitcoin: Bubble or Piratization of Central Bank Money?

Bitcoin-USD Exchange Rate today for the past year

In 2009 Satoshi Nakamoto invented a new electronic or virtual currency called Bitcoin, the design goal of which is to provide an equivalent of cash on the Internet. Rather than using banks or credit cards to buy stuff online, a Bitcoin user will install a piece of software, the Bitcoin client, on her computer and send Bitcoin directly to other users under a pseudonym. One simply enters into the software the pseudonym of the person one wishes to send Bitcoin and the amount to send and the transaction will be transmitted through a peer-to-peer network. What specifically one can get with Bitcoin is somewhat limited to the few hundred websites which accept them, but includes other currencies, web hosting, server hosting, web design, DVDs, coffee in some coffee shops, and classified adverts, as well as the ability to use online gambling sites despite being a US citizen and to donate to Wikileaks. However, what allowed Bitcoin to break into the mainstream – if only for a short period of time – is the Craigslist-style website “Silk Road” which allows anyone to trade Bitcoin for prohibited drugs. Continue Reading